Donaco International Limited / 2017 Annual Report Donaco International Limited / 2017 Annual Report 56 57 57 Donaco International Limited / 2017 Annual Report Donaco International Limited / 2017 Annual Report 56 Notes to the Financial Statements for the year ended 30 June 2017 Notes to the Financial Statements for the year ended 30 June 2017 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Construction work in progress Consolidated $ Balance at 1 July 2014 205,737 Additions 1,539,648 Exchange differences 7,031 Transfer in/(out) (609,258) Balance at 30 June 2015 1,143,158 Additions 1,612,657 Exchange differences (82,832) Transfers out (2,077,098) Balance at 30 June 2017 595,885 The recoverable amount calculation for goodwill is most sensitive to changes in growth rate and EBIT margin on sales. Based on sensitivity analysis performed, no reasonable change in these assumptions would give rise to an impairment. No impairment has been recognised for the year ended 30 June 2017 (2016: nil). DNA Star Vegas â€“ casino licence The casino licence relates to the licence to operate the DNA Star Vegas casino acquired on 1 July 2015. The licence is stated at cost less any impairment losses. This intangible asset is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of the cash-generating unit of DNA Star Vegas has been determined based on the fair value less costs of disposal. An independent valuation of the 100% equity interest in DNA Star Vegas Company Limited was undertaken as at 31 March 2017. Adjustments were made to determine the fair value less cost of disposal of the cash- generating units which was reasonably determined to be $497,685,767 (USD380,431,000 converted at the spot rate). The valuation was determined using budgeted gross margin based on past performance and its expectations for the future and are considered to be reasonably achievable. The valuation is classified as level 3 fair values in the fair value hierarchy as it was based on a 10 year cash flow forecast period. The weighted average growth rates used are consistent with forecasts included in industry reports. The valuation uses a growth rate of 4.5% in the first year, 4% in the following nine years and a terminal growth rate of 3%. The discount rates used of 16.31% reflect specific risks relating to the relevant segments and the countries in which they operate. The valuation was determined using a foreign exchange rate between Thai baht and US dollar of 34.353 THB:1 USD. A capital expenditure percentage of 1.5% has also been included in the valuation. Furthermore, the valuation includes a Discount for Lack of Marketability (DLOM) of 25%. The recoverable amount calculation for the cash-generating unit of DNA Star Vegas is most sensitive to changes in the DLOM changes in growth rate, EBIT margin on sales and a change in exchange rate between Thai baht and US dollar. An increase in excess of 1% in the DLOM would result in impairment of the cash generating unit of DNA Star Vegas. Additionally, an increase in excess of 0.5 THB:1 USD would result in impairment of the cash-generating unit of DNA Star Vegas. Management reassessed the position as at 30 June 2017 based on this valuation and determined that no impairment needed to be recognised as at 30 June 2017. Land use right An intangible asset of $32,353 (2016: $36,397) which relates to a 30-year land use right in the Socialist Republic of Vietnam. Land use right is stated at cost less accumulated amortisation and any impairment losses. The amortisation period is 30 years. This intangible asset is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Note 15. Non-current assets â€“ construction in progress Consolidated 2017 2016 $ $ Property construction works in progress 595,885 1,143,158 Construction relates to costs incurred by the new construction of the Aristo International Hotel. Amounts previously recognised as prepaid construction costs, are transferred to construction in progress, once associated works have been completed. Once recognised as part of construction in progress the amounts are then carried on the Statement of Financial Position at cost, until such time as the asset is completed and ready for its intended use. Work in progress is not depreciated, but tested for impairment annually. Once ready for its intended use an amount equal to the cost of the completed asset will be transferred to property, plant and equipment or non-current prepayment and accounted for in accordance with the consolidated entityâ€™s accounting policy for each asset class. Note 16. Non-current assets â€“ other Consolidated 2017 2016 $ $ Other debtors 3,895 78,451 Note 17. Current liabilities â€“ trade and other payables Consolidated 2017 2016 $ $ Trade payables 4,472,103 5,046,135 Deposits received 101,974 111,510 Floating chips 13,013,770 13,652,683 Interest payable 2,060,154 93,071 Other payables and accrued expenses 22,140,106 28,851,548 41,788,107 47,754,947 Refer to note 28 for further information on financial instruments.